Link Exchange - Sort Of

I'm hoping all you highly intelligent and really nice people can help me out here. I have a niche directory of useful widgets. It hasn't been doing too well in the search engines of late, at least not as well as we'd like. A widget site owner contacted us about the possibility of being 'featured' in his category. Fair enough, we can offer him a deal to be top of the listings for 'blue widgets' for, say $50 for 6 months. Or whatever. Every little bit helps.

Then my wife/accountant suggested that instead of offering a 'featured widget' package, we might actually be better off in the long run if we offered to feature this fellow for free, if he linked to our main widget page in exchange (or to the exact category page he's listed on). Taking that idea a step further, we could offer any widget site owner a featured listing in exchange for a link. Presto! Lots of links, which *may* have a more positive and long lasting effect on our revenue from better search engine rankings than simply selling a featured link space.

But then I got paranoid - would a 'link exchange' of this sort contravene either the letter or the spirit of Google's webmaster's guidelines?

Understand, I'm talking about highly relevant links from widget websites that we would happily link to from our widget pages anyway. So it isn't any sort of underhanded link farm, or 'bad neighborhood' spam I'm considering, just a free 'featured' ad in exchange for a link back, from relevant sites who are already listed in our directory anyway.

And if we DO go down this road I assume it would make more sense for widget site owners to link to the specific widget category they are listed in rather than to our main widget page. At least it makes sense to me!

Thanks Jill, that's kind of what I was thinking. I'm not sure how we would really make it a business model, though, without putting some sort of 'your featured widget here - for free' notice in each category so that widget site owners would *know* we offered that option.

Heck, I probably AM paranoid about Google penalties - they must have better things to do than analyze the wording I use to encourage a free link!

Why not just set up a featured widgets rotation or something (requiring nothing in return) and give them all a reason to associate greater value with your site?

The links are not going to restore your traffic. They might help you get a small number of targeted placements but it's an extremely rare Website that gets most or all of its traffic from a small number of terms.

What I think you should do is make the directory more informative, appealing, and interesting to both widget providers and Webmasters looking for stuff to put on their sites.

You can write stories about widget makers, reviews of widgets, how-to articles for installing the widgets, case studies about how widgets have enhanced the sites using them, etc.

You don't have to go out and hire a team of freelancers to create the next eHow to do this -- you can start with just one article per week and see where that takes you.